8.  The first applicant, Västberga Taxi Aktiebolag, a taxi company, was dissolved due to a lack of assets on 2 December 1997. The second applicant, Nino Vulic, was the director of the first applicant. At the time when the tax liability in dispute in the present case arose, he owned 50% of its shares. Later, he acquired all the shares of the company.
9.  In the autumn of 1994, as part of a large-scale investigation into taxicab operators, the Tax Authority (skattemyndigheten) of the County of Stockholm carried out a tax audit concerning the first applicant's taxi business. Having previously submitted its tax returns for the assessment year 1994, the first applicant was asked to submit supplementary information on several occasions, starting on 29 November 1994. Having discovered in the course of the audit certain irregularities in the tax returns, the Tax Authority informed the first applicant on 20 February 1995 that it intended to revise upwards the figure given in the tax returns for the turnover of the taxi business and impose additional taxes and tax surcharges on the company. The first applicant was invited to submit further comments, which it did.
10.  Having regard to the findings of the audit and the first applicant's observations, the Tax Authority – by a decision of 10 August 1995 – revised upwards the turnover of the company's business by more than 400,000 Swedish kronor (SEK). After deductions for undeclared salary and petrol costs, the Tax Authority's assessments resulted in an increase in the deficit of the first applicant's business. However, by decisions of 11 and 15 August 1995, the taxation bases for calculating value-added tax (mervärdesskatt) and employer's contributions (arbetsgivaravgifter) were raised upwards in correspondence with the turnover and, as a consequence, the first applicant's liability to value-added tax and employer's contributions were increased by SEK 47,956 and 125,650, respectively. Moreover, as the information supplied by the first applicant in its tax returns was found to be incorrect and its liability to value-added tax and employer's contributions had been increased under a discretionary assessment procedure, the Tax Authority ordered it to pay tax surcharges (skattetillägg, avgiftstillägg) amounting to 20% of the increased tax liability. The additional taxes levied on the first applicant, including interest and surcharges, totalled SEK 232,069, of which SEK 34,710 were surcharges. It appears that the whole of the amount was payable in October 1995.
11.  On 11 August 1995 the Tax Authority presented a report, according to which it intended to raise upwards the second applicant's taxable income and impose a tax surcharge, as a consequence of the assessments concerning the first applicant. The second applicant was invited to submit comments, which he did.
12.  By a decision of 6 October 1995 the Tax Authority increased the second applicant's liability to income tax by SEK 146,602. Like the first applicant, and for the same reasons, he was ordered to pay tax surcharges. The additional tax levied on the second applicant, including interest and surcharges, totalled SEK 226,776, of which SEK 57,757 were surcharges. The whole of the amount was payable on 12 February 1996.
13.  Claiming that the information relied upon by the Tax Authority to calculate the turnover of the first applicant's business was inaccurate, both applicants challenged the Tax Authority's decisions, the first applicant on 4 September 1995 in a request for the Authority's reconsideration and the second applicant on 18 December 1995 in an appeal against the relevant decision. The applicants also requested that the execution of the amounts assessed be stayed. The requests were prompted by the fact that neither an appeal to a court nor a request for reconsideration by the Tax Authority had in itself any suspensive effect on the obligation to pay the taxes and surcharges due as a result of the impugned decisions.
14.  By decisions of 8 September 1995 and 17 February 1996 the Tax Authority rejected the applicants' requests for stays of execution, stating that the prerequisites laid down in section 49 of the Tax Collection Act (Uppbördslagen, 1953:272) had not been fulfilled.
15.  By judgments of 22 February and 8 March 1996, following appeals by the applicants, the County Administrative Court (länsrätten) of the County of Stockholm quashed the Tax Authority's decisions and referred the cases back to the Authority. Having found that the formal prerequisites for granting stays of execution under section 49, subsection 1 (3) of the Tax Collection Act had been fulfilled, the court went on to state:
“However, the granting of a stay of execution under this particular provision is conditional on security being provided, if, for some reason, it can be assumed that the amount in respect of which a stay of execution has been sought will not be duly paid. As the Tax Authority did not rule on the compliance with that condition, the County Administrative Court finds that the decision[s] should be quashed and the case[s] referred back to the Tax Authority, which must examine the question whether security is required.”
16.  On 7 and 30 May 1996, respectively, the Tax Authority again rejected the applicants' requests for stays of execution. The Tax Authority found that the applicants' ability to pay was open to doubt, that stays of execution could not therefore be granted unless security was provided and that, although given the opportunity to do so, the applicants had failed to provide security. Accordingly, their requests could not be granted.
17.  The applicants appealed against those decisions to the County Administrative Court, claiming that they should be exempted from the obligation to provide security and granted stays of execution. Both claims rested on the contention that it would be unreasonable and amount to a violation of Article 6 of the Convention for enforcement proceedings to be instituted against the applicants without their cases having first been determined "in due course".
18.  By judgments of 12 September 1996, subscribing to the reasons given by the Tax Authority, the County Administrative Court upheld the impugned decisions.
19.  The applicants, who did not furnish security, lodged a notice of appeal. On 30 October 1996 the Administrative Court of Appeal (kammarrätten) in Stockholm refused them leave to appeal against the County Administrative Court's judgments. They did not appeal to the Supreme Administrative Court (Regeringsrätten).
20.  Meanwhile, each of the debts being outstanding and no stays of execution having been granted, the applicants were registered as being in arrears with the taxes and tax surcharges imposed as a result of the Tax Authority's decisions. Enforcement proceedings were therefore instituted against both applicants.
21.  On 20 December 1996 the Enforcement Office (kronofogde-myndigheten) of the County of Stockholm, representing the State, filed a petition with the District Court (tingsrätten) of Stockholm, requesting that the first applicant be declared bankrupt. According to a statement submitted by the Office, as of 16 December 1996 the first applicant's tax liability relating to the assessment year 1994 amounted to SEK 271,733, including penalties for late payment (dröjsmålsavgifter) that had accrued since the final date on which payment could have been made. That amount included SEK 33,041, plus 6% in penalties for late payment, in tax surcharges. The first applicant also had a smaller tax liability relating to the assessment year 1996. The Office noted that an investigation had revealed that the first applicant owned no property that could be seized in order to cover the debts in question.
22.  The District Court held a hearing in the case on 3 February 1997. Although duly summoned, however, no representative of the first applicant appeared before the court. Instead, written observations previously submitted on its behalf were read out. According to the minutes of the hearing, the first applicant alleged in those observations that Article 6 of the Convention had been breached in that it had been denied a fair hearing.
23.  By a decision of 10 February 1997 the District Court declared the first applicant bankrupt. In so doing it noted that the alleged breach of Article 6 of the Convention did not affect the State's standing to petition for bankruptcy, that the first applicant was under an obligation to pay the debts and that it had to be considered insolvent as it had been found to have no distrainable assets.
24.  The first applicant appealed to the Svea Court of Appeal (Svea hovrätt), claiming, inter alia, that the District Court's decision amounted to a violation of Article 6 of the Convention in that the enforcement proceedings had been allowed to continue irrespective of the fact that the Tax Authority's decisions regarding its liability to taxes and tax surcharges had not yet been reviewed by a court.
25.  The first applicant's appeal was dismissed by the Court of Appeal on 21 February 1997. Leave to appeal against the appellate court's decision was refused by the Supreme Court (Högsta domstolen) on 6 May 1997.
26.  On 2 December 1997 the bankruptcy proceedings were terminated owing to a lack of assets.
27.  On 23 and 25 April 1996 the Enforcement Office seized the second applicant's savings in two banks, amounting to a total of SEK 18,132, in partial defrayment of his tax liability.
28.  The second applicant appealed to the District Court, requesting that the seizure be quashed. The appeal was dismissed by the court on 28 June 1996. He made no further appeals, considering that they would have no prospects of success.
29.  Following the Enforcement Office's decision of 22 November 1996 to seize part of the second applicant's monthly income, some minor amounts were recovered. By a decision of 5 December 1997 this seizure was discontinued. As of 21 August 2001 the second applicant's tax liability relating to the assessment year 1994 amounted to SEK 346,161, including penalties for late payment. Of the original debt of SEK 226,776, SEK 201,910 remained unpaid. In accordance with section 3 of the Statute of Limitations for Tax Claims (Lagen om preskription av skattefordringar m.m., 1982:188), the whole debt became statute-barred on 31 December 2001, at the end of the fifth year following the day it became due.
30.  On 30 August 1995 the Tax Authority reported the second applicant to the Public Prosecution Office (åklagarmyndigheten) in Stockholm for suspected tax crimes based on the information obtained during the tax audit and the statements made in the applicants' tax returns. On 23 May 1997 the second applicant was indicted for a bookkeeping offence. A hearing was held by the District Court on 22 January 2001. During the course of the hearing, the public prosecutor withdrew the charges and the District Court consequently struck the case out of its list.
31.  As mentioned above, on 4 September 1995, the first applicant requested the Tax Authority to reconsider its decisions on taxes and tax surcharges. On 9 October 1995 the Authority decided not to change its decision of 10 August 1995 concerning the assessment of the turnover of the company's business. Subsequently, the first applicant sent comments and questions to the Tax Authority, which replied to the questions on 17 February 1996. On 22 February 1996 the first applicant lodged formal notices of appeal against the Tax Authority's decisions. It also submitted comments and questions to the Tax Authority, which, by a letter of 19 August 1996, stated that it stood by its decisions. The first applicant presented further observations on 5 September 1996. By decisions of 11 and 12 June 1997 the Tax Authority refused to change the impugned decisions. Consequently, the matters were automatically referred to the County Administrative Court for determination.
32.  By a decision of 17 July 2000 the County Administrative Court dismissed the first applicant's appeals. The Court considered that, as it had been dissolved on 2 December 1997, the company lacked legal capacity (rättskapacitet) to act as a party. Accordingly, the appeals could not be examined.
33.  On 9 October 2001 the Administrative Court of Appeal upheld the County Administrative Court's decision. On 12 November 2001 the first applicant appealed to the Supreme Administrative Court. By a decision of 23 April 2002 the latter court granted leave to appeal. Thus, the matter is presently pending before the Supreme Administrative Court.
34.  At the same time as his appeal of 18 December 1995, the second applicant submitted comments and questions to the Tax Authority, which replied on 17 February 1996. A few days later he sent a letter to the Authority. By a letter of 19 August 1996 the Authority stated that it stood by its previous decision. The second applicant presented further comments on 5 September 1996. On 12 June 1997 the Tax Authority refused to change the impugned decision. Consequently, the matter was automatically referred to the County Administrative Court for determination.
35.  By a judgment of 29 March 2000 the County Administrative Court upheld the Tax Authority's decision of 6 October 1995. It considered that the information on which the impugned decisions were based was reliable and showed that the applicant's income and the tax in question could not be assessed in accordance with the statements made in his tax returns. Thus, the Tax Authority had had good reason to make discretionary tax assessments based on the information obtained during the audit. Furthermore, the amount levied on the applicant could not be considered too high. The County Administrative Court also considered that there had been sufficient reasons to impose the tax surcharge in question and that no legal basis for remitting it had been shown.
36.  On 15 December 2000 the Administrative Court of Appeal upheld the County Administrative Court's judgment. During the course of the proceedings before the appellate court the second applicant was on one occasion granted a four-week extension of a time-limit for the submission of observations. On 12 January 2001 he appealed to the Supreme Administrative Court. Following another extension of a similar time-limit, he completed his appeal on 20 April 2001. By a decision of 3 May 2002 the Supreme Administrative Court refused him leave to appeal.